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A perhaps naive approach to market timing

jerry
edited September 2013 in Fund Discussions
The last bull market ran about 5 years(2002-2007) .The previous one ran about 6 years (1994-2000. Before that we had shorter ones 90-93 and 88 -90 and before that often more 5 year bull markets. This suggests to me that since the bull market began in 2009 and we have ( or at least I have ) no idea how long how long it will last we should begin to invest more conservatively.. Not being as sure as John Hussman that I am right I am suggesting that switching from aggressive stock funds to moderate allocation funds (and yes I am at least a little aware of bond market related issues could prove to be prudent and maybe even profitable. At least if I am wrong one will still make money..

I partially got this idea from an article in 1988 that noted that in 1987 a portfolio consisting of Fidelity Magellan(then considerd aggressive) for the first 6 months and then switching to Mutual Shares(then considered a a good conservative fund) outperformed both funds for the year
Anybody doing anything like this or thinking it has merit or seeing the flaw?

Comments

  • JunksterJunkster
    edited September 2013
    Before 1982 the cycle was generally four years for bull and bear with the bear comprising around one year of that cycle. As for your comments you are way out of whack with your years. 1994 was not a bear market for equities. 90-93? There was a mini bear of some three months with an over 20% decline in there. It never pays to overthink in this game!!! And Hussman? His long term record speaks for itself.

    Edit: Market timing? Naive or sophsticated, the results are pretty sorry.
  • Art
    I agree we may be due for a correction. Not sure what is best to do but I have made a few moves and have plans for others. A 60/40 stock to bond ratio is my target. International is 50% of my stock portion.

    I have held on to PTTRX for now and like the new Gaffney fund EVBAX for future purchase in the bond space.

    I am scaling back on certain funds and adding others. Took profit in CHTTX and sold all VIGRX. These are the more aggressive funds in 401. Added to RMFFX and ODMAX in 401.

    In Roth adding TGMEX a mix of EM stocks/bonds. May add FSPHX with new ROTH contributions.

    Keeping FPACX, MFLDX, IVWIX, DIBRX, PCVAX, MAPTX, WAEMX, SFGIX and BUFOX at current levels.

    I am taking a big bet on emerging markets at 15% of portfolio for the near future.

  • MOZART325
    edited September 2013
    The Old Testament describes a seven year cycle of feast and famine. Check out the S&P 500 annual returns (second number with dividends included) every seven years since 1973

    1973 -17.37% -14.66%
    1980 +25.77% +32.50% (but 1981 was -9.73% -4.92%)
    1987 +2.03% +5.25% (stock market crashed in October)
    1994 -1.54% +1.32%
    2001 -13.04% -11.89%
    2008 -38.47% -37.00%

    Based on the above, it may pay to get defensive in late 2014.

    http://en.wikipedia.org/wiki/S&P_500
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